President Biden continues to absolve himself of responsibility that his gargantuan $1.9 trillion pandemic relief package likely contributed to the current record inflation.
“You could argue about that [the American Rescue Plan] had a marginal, minor impact on inflation,” Biden said in an interview with the Associated Press on Thursday. “I do not think so. And most economists don’t believe that was the case. But the idea that caused inflation is bizarre.”
Biden’s comments stand in stark contrast to a speech he gave in November 2021, when he acknowledged that the “$1,400 checks” the government was handing out to Americans could spur inflation, among many other relief measures.
Back then, he seemed to understand the economic concept of “more money chases fewer goods,” the dynamic that drives inflation. Since the outbreak of the pandemic, many supply chains have been disrupted and markets have been unbalanced.
Referring to his stimulus funds, he said: “It changes people’s lives. But what happens when there’s nothing to buy and you have more money to compete to get it? [goods]? That creates a real problem.”
Aside from contradicting herself, Biden’s claim to the AP also contradicts that of Treasury Secretary Janet Yellen, who admitted before the House Ways and Means Committee last week that the March 2021 package “modestly” resulted in higher prices. But she hailed legislation designed to cushion Americans’ finances during the Covid-19 downturn, claiming it has “brought Americans excellent rewards and modest inflationary contributions at best.”
Even as inflation appears to be soaring and the Federal Reserve finally steps in and hikes interest rates to slow it, Yellen argues that the fundamentals of the economy are resilient, pointing to what is “arguably our strongest labor market overall” in the post-war era. “
Despite predictions by economic analysts that a recession may be imminent, speaking to the AP, Biden assured the AP that it was “not inevitable” given that the Fed has begun reversing its accommodative monetary policy. While Yellen recently dodged the question and said, “Don’t expect me to announce it,” former Treasury Secretary Lawrence Summers predicted on Sunday that a recession is likely to hit the United States within the next two years.
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“I think there’s certainly a risk of a recession next year,” Summers told CNN State of the Union host Dana Bash. “I think given where we’re at, it’s more likely than not that we’re going to have a recession within the next two years.”
To deflect blame from the government, both Biden and Yellen have made seemingly false claims that major developed nations experience higher rates of inflation than the US
“If it’s my fault, why is inflation higher in every other major developed country in the world? is that your question? I’m not a sage,” Biden told the AP.
“We see high inflation in almost every developed country in the world. And they have very different fiscal policies,” Yellen said during a hearing before the Senate Finance Committee on June 7. “So it can’t be that most of the inflation we’re seeing reflects the impact of the American bailout plan.”
Some recent international figures on inflation show Germany at 7.9 percent, Japan at 2.5 percent, Canada and Italy at 6.8 percent, France at 5.2 percent, India at 7.04 percent and Saudi Arabia at 2, 2 percent. US domestic inflation climbed to a staggering 40-year high of 8.6 percent in May, which Biden continues to largely attribute to “Putin’s price hike” over the conflict in Ukraine.